Therefore, it is important to study and understand the implications of heterogeneous shareholders with broadly speaking different interests, views, and priorities with respect to corporate governance mechanisms. For instance, what are the consequences for corporate governance structures and policies (board composition, CEO compensation, selection, and discretion, board dynamics, and shareholder activism) of the simultaneous presence of different organizational ownership types, such as institutional investors and families for instance (e.g., Kavadis & Castañer, 2015)? How do organizational blockholders cope with significant goal divergence? Furthermore, how could contemporary governance mechanisms effectively manage the potentially conflicting goals and expectations of a firm's different shareholders?
Moreover, differences in terms of the institutional context from which shareholders originate have been shown to affect governance issues, such as the focus on shareholder value maximization (Fiss & Zajac, 2004) and the use of independent auditors (Desender et al., 2016), as well as organizational structure (Zattoni, 1999), corporate refocusing (David et al., 2010; Kavadis & Castañer, 2014), restructuring (Ahmadjian & Robinson, 2001; Kavadis & Castañer, 2015), and internationalization (Filatotchev, Stephan, & Jindra, 2008).
The increasing presence of different types of global organizational owners has not only promoted convergence in corporate governance practices, but has also contributed to tensions between companies and owners with different countries of origin (Ahmadjian & Robins, 2005). Extant research shows that despite the process of governance convergence, differences remain (e.g., Aguilera & Jackson, 2003; 2010; Berry, Guillén, & Zhou, 2010; Fainshmidt et al., 2018; Ghemawat, 2005; Hall & Soskice, 2001; Kavadis & Castañer, 2019; Witt et al., 2018; Zattoni & Minichilli, 2009). Given this global persistence of institutional heterogeneity in terms of corporate governance, questions arise about the consequences of greater internationalization of corporate ownership for corporate governance mechanisms and their effectiveness. Will there be a global convergence in corporate governance to a unique worldwide model and which one? Will the relative importance of different origins of investment funds determine it?
Many corporate governance prescriptions emanate from the U.S. context, with the predominant focus on agency problems (e.g., Dalton et al., 2007; Jensen & Meckling, 1976). The benefits of ownership concentration, a remedy of the separation of ownership from control (e.g., Berle & Means, 1932) via enhanced monitoring of corporate executives (e.g., Amihud & Lev, 1981; Bebchuk, Brav, & Jiang, 2015), however, may not be uniformly beneficial. Instead, in other institutional contexts, principal-principal problems, or the pursuit of the interests of blockholders to the detriment of the interests of other (minority) owners (e.g., Chang, 2003; La Porta et al., 1998) take precedence. Global investment flows, as well as the rise of professionalization, raise the question whether such problems are orthogonal or complementary (Goranova & Ryan, 2014). Complexities such as pressure sensitivity (e.g., Brickley, Lease, & Smith, 1988), investments in competing firms (Azar, Schmalz, & Tecu, 2018; Connelly et al., 2019), and exposure to agency problems at the investor level (Bebchuk, Cohen, & Hirst, 2017), raise the question about the 'balance' of power among different owners. Would asymmetries among owners harm certain investors, raising policy questions in terms of investor protection (e.g., Cuomo, Zattoni, & Valentini, 2013)?